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CHATHAM, Ont. -- The owner of a local shipbuilding company is considering legal action against the Ontario government over the awarding of a $40 million contract to build a new Pelee Island ferry.

"I'm not ruling out seeking a court injunction," said Andy Stanton, president of Hike Metal Products in Wheatley, Ont.

"We're debating what to do."

The government announced Thursday that a company in Chile won a $40-million contract to build a car/passenger ferry to replace the 55-year-old M.V. Pelee Islander.

"That's $40 million of our tax money streaming right out of the country," Stanton said. "It's a no-brainer to keep this kind of work."

A spokesman for the Ministry of Transportation said the procurement process must not discriminate based on geography.

Chatham-Kent Essex MPP Rick Nicholls said the two-year project would have created 75 direct new jobs and 50 indirect new jobs for the region.

"God bless the Chileans but we have to look after our own," said the Progressive Conservative MPP. "This area has been hard hit economically. We need to spend our hard-earned Ontario tax dollars in Ontario or at least in Canada."

Nicholls said his inbox was filling up with e-mails from constituents unhappy that a foreign company would build the ferry.

Like Stanton, Nicholls questions the procurement process, calling it "broken."

"Hike Metal got shut down early in the process," Nicholls said. "That's not good. I believe Hike Metal has a lawful and constitutional right to know why they were not considered. I think the entire procurement process needs to be readdressed, to be more transparent."

Essex NDP MPP Taras Natyshak said, "it seems like a massive missed opportunity on the part of the government to include domestic suppliers and manufacturers in this project.

"And whether that is inherent in the bidding process or for other reasons is really unfortunate."

Natyshak said he will raise the issue in the Ontario legislature when it resumes this fall.

Prior to making a "request for quotation" (RFQ) companies had to submit a pre-qualifying package.

"It was very detailed," Stanton said. "We sent a pile of documents in support of our operations, our financials, our history."

Despite a history of building service vessels since 1958, Hike Metal was rejected.

"We didn't qualify," said Stanton, who was not given a reason for being rebuffed.

Stanton joined forces with some colleagues in Quebec in order to stay in the process and submit an RFQ.

He's been told by his Quebec partners that their proposal was within roughly 5% of the winning bid from ASENAV in Chile.

"They have to get the thing here and the government has to pay an import tariff because it's coming in from another country," he said.

Canada has a free trade agreement with Chile but Stanton said shipbuilding is exempt and tariffs were lifted only on vessels more than 129 metres.

The proposed ferry will be 60 metres in length.

Nicholls said the import tariff could run as high as 20 to 25% of the accepted bid.

"I certainly hope more Ontario tax dollars don't have to pay for this," he said.

Bob Nichols, a spokesman for the Ontario Ministry of Transportation, said in an e-mail that the "request for qualifications" -- a pre-bidding process for the contract -- required that bidders have the financial capability and shipyard resources to carry out the project.

"Ontario is bound by trade agreements such as the Agreement on Internal Trade that may not allow favourable treatment of local proponents, regardless of the subsidy that may be offered in another jurisdiction," Nichols said.